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Spotify in India, Gross NPAs Reduces, Amazon Beats Flipkart, Trump on Climate Change et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 28, 2018 2:23 PM 3 min read
Editorial

Good evening reader,

 

Question: What does it take to change the world?

 

Elon Musk: It takes about 80 working hours a week, peaking above 100 at times to change the world.

 

Coincidentally, Musk’s tweet comes days after a survey revealed that India is the most vacation deprived nation in the world, followed by South Korea and Hong Kong.

 

Over 53% of Indians take fewer vacation days than they get. 35% don’t take leave owing to a tight work schedule or unavailability of staff to cover. Even on holidays, nearly 60% expressed discontent on not being able to completely ‘switch off’ from official responsibilities.

 

On top of this, India lacks a universal national limit for maximum working hours, with no guaranteed minimum amount of annual leave.

 

South Korea and Japan have a term to denote cases of death due to overwork (Karōshi). Are we there yet? Or do we even need to

 

Consider this, France's 29-hour actual working week contributes $105.3 to the country's GDP per hour worked, higher than US working an average of 34 hours a week and contributing $102.3 to the GDP. Guess we can all do well with a lesson or two on maintaining work-life balance. 

 

Moving on to today’s Top 6 Business Stories through our End of Day Wrap Up:

 

Gross and Net NPAs of banks reduce in the last two quarters.

 

The What: The RBI reported that the Gross and Net NPAs reduced in two quarters ending Sep 30, 2018 after hitting a peak in Mar on back of efforts by the Government and Central Bank.

 

Up Close: Net NPAs for scheduled commercial banks fell from INR4.54L crore in the Mar quarter to INR4.10L crore as of Sep. PSBs also reported a marginal decrease in their contribution to NPAs.

 

Zoom Out: Profitability of banks was still impacted by higher provisioning required due to deterioration in asset quality and due to a decline in earnings from loan assets.

 

Amazon India beats Flipkart in sales for FY17-18.

 

The What: As per Barclay’s, Amazon is estimated to have had $7.5bn of gross sales in FY17-18 vs. Flipkart’s $6.2bn (excluding its fashion businesses Myntra and Jabong). However, Flipkart is still ahead of Amazon in terms of revenue. For the same FY, Flipkart reported revenue at $3.8bn, ahead of Amazon at $3.2bn.

 

Perspective:  Amazon has beaten Flipkart by a large margin inspite of the latter having a head start of over 6 years.

 

Spotify plans to launch in India in the first quarter of 2019, secures deals with major rights holders.

 

Zoom Out: Spotify is stepping up its international expansion amidst investor pressure after its stock dropped about 30% since its peak in July. The company recently introduced its streaming service to 13 territories in the Middle East and North Africa.

 

Some major record labels threatened to withhold rights for India after Spotify began acquiring song rights directly from musicians.

 

Moody’s downgrades Yes Bank to non-investment grade, changes outlook to negative.

 

The What: Moody's downgraded Yes Bank to non-investment grade and changed outlook to negative from stable on the back of multiple resignations from the Board.

 

The Why: The resignations follow RBI's earlier directive which did not extend the bank's MD & CEO Rana Kapoor’s tenure after January 31, 2019, raising concerns over corporate governance. Despite of the currently stable credit fundamentals, a transition in leadership is likely to complicate management's effective implementation of the bank's long-term strategy

 

Zoom Out: Yes Bank share price tanks c. 12% closing at 162 (32-month low).

 

US/INTERNATIONAL

 

US President Donald Trump shuns scientific consensus surrounding climate change. 

In an interview with The Washington Post, Donald Trump said that he had “very high levels of intelligence,” and that he did not believe in the scientific consensus surrounding climate.

 

Unilever beats Nestle to emerge as the leading bidder for GSK's Indian Horlicks business.
 
The What: As per a Financial Times report, GlaxoSmithKline has entered into exclusive negotiations with Unilever to sell its Horlicks nutrition business in India. This marks the end of the auction process for the $4bn unit that includes the prized Horlicks malted drink brand popular in India.

 

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